Jerry A. Miccolis, CFP®, CFA, FCAS, CERA, is a principal and the chief investment officer at Giralda Advisors, a provider of risk-managed investment advice and solutions to individuals and RIAs, notably Brinton Eaton. He is co-author of Asset Allocation For Dummies®. Email Jerry Miccolis

Marina Goodman, CFP®, CFA, is the investment strategist at Giralda Advisors and a portfolio manager for the risk-managed investment solutions provided by the firm. She is working to bridge the gap between research and practice to improve the investment process. Email Marina Goodman

In his book, Are You a Stock or a Bond? Identify Your Own Human Capital for a Secure Financial Future, Moshe Milevsky highlighted one’s human capital as the most important asset over one’s lifetime. In their article “Importance of Human Capital in Recovery from Divorce for Women” in the November 2013 issue of the Journal, Bridges, De’Armond, and Dean quantified the effects of women’s investment in their own human capital (or lack thereof) and their subsequent financial recovery from divorce. Unsurprisingly, women who don’t invest in their education and careers fare far worse than those who do. As a profession, are we giving married women the best advice on investing in their personal human capital?

In keeping with the Bridges et al. article, we’ll assume in this column that the husband is the breadwinner. (The same principles apply, of course, to the husband if his wife is the primary earner, or if the couple is unmarried.)

Often, the advice given by financial professionals to mothers married to high-income-earning men is that they should not work. Her income, low relative to the husband’s, would be taxed at their marginal rate—typically in the highest bracket. Worse, her income may push the couple’s total income into the highest bracket, or it may phase them out of deductions. And after child care costs she may be left with practically nothing. For example, assume her income is $50,000. At a 47 percent marginal tax rate (Social Security, Medicare, federal, and state) she is left with $26,500, which may not even cover child care costs and the nanny tax, so why bother?

Look for the Long-Term Benefit

As financial planners, we know that we need to evaluate actions not just in terms of their immediate effects, but also their impact in five, 10, even 20 or more years from now. Let us assume that the current net financial benefit of the woman’s job is $0. Might it still make sense for her to work from a purely financial perspective?

First of all, her current salary is not her future salary. She very likely will get raises, and eventually her job will provide a financial benefit. The first few years can be viewed as an unpaid internship.

Second, work experience leads to career advancement, which could have a quantum-level impact on her financial future. Say a woman spends five years working while getting no financial benefit due to taxes and child care costs. Her youngest then enters school and suddenly child care costs plummet. After five years of experience, she may get promoted and now her income may be $75,000. If, instead, she was just starting out at that point, she would be earning $50,000. (We’re ignoring inflation in this simple example—it would, of course, merely magnify the effects.) The difference is not $25,000. It is more like being an entire professional level higher for the next 30 years. Over the course of a career it can be the difference between middle management and eventually being in the C-suite.

Therefore, there is a long-term economic benefit even if the current financial result is negative. Instead of an unpaid internship, the first few years of a mother’s working may be viewed as college expenses (with a generous work-study program). The idea is the same—pay now for much higher expected earnings later.

In many upper-income families, child care costs don’t plummet when children start school. Rather, they morph into private school tuition. In that case, the woman’s income can go a long way to cover the significant increase in the family’s expenses.

Note the bias inherent in this discussion. Child care is considered a cost exclusively against the mother’s income. Tuition, however, is a “family” expense. Because a mother’s decision to work today can have a significant future economic benefit for the family, child care also should be viewed as a family expense.

The Risk of Not Working

So far, we have discussed only the financial reward of working. What about the financial risk of not working?

Planners typically advise clients to get life insurance in case the breadwinner dies, disability insurance in case he becomes disabled, plus a host of other insurance policies for other types of financial risks. We understand that paying a premium, which can be a substantial expense, can be worth it to maintain the family’s financial stability in the face of catastrophic events. However, there are numerous risks that insurance will not sufficiently cover.

The husband can lose his job (and also his employer-paid health insurance) or his business may decline significantly. Very high and unexpected expenses may be incurred. The couple can get divorced. The couples who are most at risk when the wife does not work are middle-income to mass affluent, working age, have children at home, and have high income and expenses but relatively low savings.

A woman’s ability to earn a decent salary is the most comprehensive insurance policy she can have. If her husband’s income declines or is eliminated, then her income is a back-up. Also, if she is working part time, it is a lot easier for her to transition to working full time than if she wasn’t working at all. Even though her salary may not be enough to support the family’s lifestyle, it buys them time for him to find another job and/or to adjust their lifestyle. Another benefit her job may offer is employer-sponsored health insurance—something they will suddenly need.

If the couple gets divorced, then she may get significant assets and alimony, or she might not—a lot depends on the state where they live and other circumstances. Even among upper-income families, many women would still experience a significant decline in lifestyle upon divorce, especially if they have no means of supporting themselves. The risk that a woman will get divorced is greater than the sum of the risks of her husband’s premature death, disability, or just about any other financial catastrophe all put together. The potential loss is substantial. This is something we need to keep in mind (though not necessarily say aloud) when advising married couples.

Help Clients Assess the Risks and Rewards

So what advice should financial advisers provide? While the topic is delicate, it still can be broached tactfully. For a married woman, especially a mother, the decision on whether or not to work outside the home is deeply personal and complex. It is certainly not our job to pass judgment or to push women into doing something they don’t want to do. It is our job to discuss the risks and rewards of different lifestyle choices, as well as help clients assess and address the risks.

The adviser can ask the wife in a non-judgmental manner about whether she is interested in returning to work at some point in the future. For families where the woman has no interest in working outside the home, the adviser can discuss their greater financial vulnerability and the resulting need for higher levels of insurance and savings to address both their current and long-term needs.

The adviser also can state the importance of the wife’s maintaining whatever professional credentials she already has as an additional insurance policy for the family. It is helpful to emphasize the benefits to the entire family, not just to her. This will help prevent the woman from feeling “selfish” for the time and expense it would take for her to maintain her credentials.

If the wife states that she would like to work but doesn’t feel that it makes financial sense, the adviser can help the couple evaluate the long-term financial benefits and how they may outweigh the short-term cost. The difficulty that many women experience in entering the workforce if they have been away for many years also should be discussed.

A married woman’s human capital is a source of wealth that often has been overlooked, or the short-term costs given outsized emphasis. As financial advisers, we need to make sure we help our clients evaluate both the short-term and long-term financial impact of their lifestyle choices so that they can make fully informed decisions.